Loan Modification
Do a Loan Modification Yourself
Pursue a loan modification only if no other options are available. Obviously you must be suffering some type of hardship that makes it impossible for you to make payments on your current loan. A modification is only available for the homeowner who can afford to make reasonable mortgage payments, but can't afford to make payments on an existing loan.
It is possible to do a loan modification yourself. You will receive many letters from your lender offering to modify your loan. Before calling them visit www.MakingHomeAffordable.Gov. On that site you can learn how to get free assistance from your lender. You can speak with a HUD counselor at 1-888-995-4673 for no charge. I strongly encourage you to avail yourself of free non-profit assistance. You can learn more by visiting my webpage on the HAMP program.
When you submit a loan modification package, the lender is looking for one thing: can you afford the new payments. In order to get the loan modification you must convince the lender that you are not qualified for the old loan but are qualified for the new loan. Lenders are under pressure to modify loans and the result is a substantial number of homeowners redefaulting.
Generally with a loan modification the lender looks at all sources of income, which is different than the qualification standards for traditional loan. The key is that all sources of income must be documented. If these sources of income are not sufficient to qualify you for a modified loan, then you will need to look at other remedies such as a short sale or perhaps even bankruptcy.
frustrated at whole process
We purchased our first home in San Francisco in November 2006. We became pregnant and had taken an early pregnancy leave due to bedrest orders from the doctor. With a reduced income coming through our situation became difficult and desperate. Late 2008 we started to miss our mortgage payments and have accrued approximately $27,000 in late charges. We tried to stay afloat by liquidating many of our savings and assets. We also have even depleted a retirement account. We almost immediately started to work with non-profit organizations to submit a request for loan modification-from October 2008 to present have still be waiting for a work out package from our lender. We have also tried to call our lender directly but were told that they can not do anything for us. I just recently tried to follow-up with the non-profit organization to see if our file was responded to and was told that our file may have been "lost along the way" and would need to resubmit everything all over again. I have tried to contact for-profit loan modification companies and have found them to be pushing us towards bankrupcy. We decided on January 2009 to relocate to the east coast to be closer to family and rent out our property for less than the mortgage. Since moving we have now dual income coming through and have made our mortgage payments but have found it very difficult. We didnt qualify for loan modifications we were told because we were not living in the home. Do you have any recommendations for us? Thanks for your input.
Need larger house...
I read your your on-line articles on the Foreclosed Dreams Site and hoping to get your thoughts, and guidance with my situation. My wife and I, along with our nearly 2 year old son live together in a 2 bedroom, 2 bath condo in Foster City, CA (just south of San Francisco). It was purchased in 2005, at the peak of the housing market for $750,000, with a current mortgage balance of $675,000. The current market value is somewhere in the neighborhood of $600,000, and after real estate commissions should net $570,000. We are now expecting our second child and the small condo is not big enough. I need to sell the property for my growing family as we will not fit into the existing space, but it will sell short. We have good credit and everything in good standing. I have $50,000 in the bank but would prefer not using it - as if I use it to apply to the deficit, then will not have anything for savings or down payment for my next house nor will it cover the short sale. Is there any hope for us to sell short or work out the mortgage in some way, or do you have suggestions or guidance? I appreciate your input and any thoughts you might have on the topic.
No short sale where no true "hardship"
A lender will not work a short sale where there is not a true hardship (as defined by the lender—I’m sure your situation is, or is going to be, a personal hardship for your family.) If you want to move to a larger home you will have to sacrifice either your credit or your savings. You’d be surprised how many people will exhaust their savings to protect their credit. You need to decide how important credit is to you. I mention this, because some folks in your situation use their credit to buy (or rent) a second, larger home with their cash and great credit, while still owning their first home. After they are in the new home—they walk away from the mortgage on the first home. The bank foreclosures and has to absorb the deficiency (unless there are non-purchase money liens on the house, or you live in a state that doesn't have anti-deficiency statutes.) A person following this course sacrifices their credit—and has to wrestle with their conscience—in exchange for perhaps a better quality of life. P.S. A bad credit score can affect more than your ability to get, say, a new car—if might impact your ability to get a new job.
Can't sell house - need to go 3 months in arrears?
Hi, I have a house that I have tried to sell at least 3 times over the past 4 years. I knew that once my child support ended I would have difficulty keeping payments up. I had no luck selling back 2 years ago and then tried again this year. Due to the economy my house has decreased in value by $50,000. I owe 168,500 and the house is just reappraised by county for taxes at $137,800. I have tried to work with my lender to adjust loan or do modification but the only thing they did is reduce payments by $150, which basically was monies going to my principle. Now after having this 5/1 ARM loan at 6.25 which they extended 2 years, I still owe $168,500 which is nearly the original balance. I have paid over $24,000 on a loan that pretty much has gone nowhere, but yet they will not modify. I have borrowed on 403B to keep payments up, but now have used that up also. I now have to stop making payments to get any kind of relief. Help! I was told priniciple reductions cant be done. State/Country: OhioTried selling. Tried contacting lender for past few years noting my difficulty to pay and asking for refinance. They would not do without adding fees and new appraisal which then they agreed would be useless since the property values have gone down so much. Now, I am told that I need to be in arrears by 3 months before someone will help and also have been told that I can still be responsible for monies not collected even after a short sale. I have searched data base for attorneys in Ohio but none come up. Any advice or help you can give is appreciated.
Can't sell house....
As you are probably aware, Ohio does allow for deficiency judgments so you can be liable for the difference between what your house sells for at auction and what you owe. However, You are not responsible for a deficiency with a short sale, if sale sale is approved by your lender. If it approves the short sale, it is agreeing to accept less than it is owed. You need to have an Ohio lawyer look over the transaction (many brokers are familiar with the process—but legal advice is cheap relative to what is at stake.) If you can’t find a buyer to purchase your house “short” you may want to consider Chapter 7 Bankruptcy. Chapter 7 will wipe out any deficiency judgment, as well as 2nd mortgages. After you file you can stop paying your lender and live rent free for a few months. Use that money to get a new place to live. Get a free consultation with a local bankruptcy attorney and explore your options.
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